Merck, Accounting Concerns Pound Stock Prices

By TMO Staff

Jul 7th, 2002 5:00 PM EDT

Monday Morning Activity

The markets dropped in early Monday trading after a near euphoric rise in prices on Friday during a holiday-shortened trading session. Dow component Merck was hit hard in Monday trading following the companyis statements about the accounting treatment of certain co-payments by one of its units. The issue has no effect on Merckis net income, but in the aftermath of the Enron and WorldCom disasters investors are wary of any news regarding accounting changes.

On Tuesday President Bush is scheduled to deliver a major address about corporate accountability as pressure builds on Capitol Hill for legislation and greater regulatory oversight to bring about changes in corporate accounting practices. Concerns about the content of President Bushis speech kept selling pressure on stocks throughout the dayis trading.

Monday Market Close

In late-day trading the markets capitulated to low volume and little buyer interest and the indexes recorded big loses for the day. Bargain hunters provided a porous floor for stocks as analysts debated whether or not the markets were reaching a true bottom, ready to begin a slow, awkward advance after recently testing post 9/11 lows.

At the close of trading on Monday the Dow Jones Industrial Average stood at 9,274.90, down 104.60. The S&P 500 was off 12.05 at 976.98. The NASDAQ Composite Index closed down 42.75 at 1,405.61. Apple closed down $.73 at $18.01 on low volume.

Apple

Apple Computer has reportedly cut staff at its Laguna plant purportedly due to the industry-wide slowdown in PC sales. The job cuts are isolated to the Sacramento area plant and an Apple spokesperson claims that although job cuts have occurred at the plant, Appleis overall headcount continues to grow.

In other Apple news, Windows users of the Emagic products recently acquired by Apple are being offered a free lateral migration to the Mac versions of the products. Mac versions of Emagicis products had represented roughly two-thirds of the companyis sales. Appleis decision to discontinue Windows versions of Emagicis products at the end of September has caused consternation among Emagicis customers who use Windows-based PCs.

Gateway

Gateway, the struggling PC mini-major, last week saw its stock drop to a new 52-week low. The San Diego-based maker of Windows PCs has reduced its exposure to the US market in an effort to reduce costs and return to sustained profitability. Gateway closed Monday at $4.10, off $.07.

Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Appleis financial dealings!